Alpha Bank: Prices of new residential properties rise fast in Romania, but this may change

The prices of new residential properties in Romania accelerated to 10.9% y/y in Q1, 2023, compared to +5.6% per annum on average in 2020-2022, according to an Alpha Bank analysis.

This comes in contrast to both the prices of existing properties, where the price dynamics decelerated to 1.5% y/y from 5.0% p.a., and to the price dynamics of new properties (as well as existing properties) in other countries in the region.

But the price of new residential properties in Romania may slow down versus the existing properties' prices once the latter (existing properties) are being refurbished, Alpha Bank noted.

"In Romania, the preference for new residential properties, probably due to superior energy efficiency over existing residential properties, will keep their price rising. But with inflation falling and households' purchasing power recovering, the rise in the price of new residential properties will be dampened by the acceleration of the renovation wave of existing residential buildings, increasing their attractiveness and price. For this reason, it is possible to witness a decrease in the differential between the dynamics of the price of new residential properties and the price of existing residential properties," Alpha Bank analysts said, quoted by Ziarul Financiar.

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